If the Spending Multiplier Is Greater Than 1

question 115

Multiple Choice

If the spending multiplier is greater than 1.0,a $200 billion increase in autonomous investment will cause:

• A)equilibrium investment to increase by less than $200 billion.
• B)equilibrium investment to decrease by more than $200 billion.
• C)equilibrium real GDP demanded to increase by more than $200 billion.
• D)equilibrium real GDP demanded to decrease by less than $200 billion.
• E)equilibrium saving to decrease by more than $200 billion.

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Definitions:

Disposal

The process of getting rid of an asset, including selling, scrapping, or another method of removal from the company's possession.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated as depreciation expense over its useful life up to a specific date.

Residual Value

The projected worth of a tangible asset upon reaching the conclusion of its operational lifespan.

Depreciation Expense

An accounting method used to allocate the cost of a tangible or physical asset over its useful life.